Essay on Wealth: Characteristics and Criticism

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Adam Smith, father of Economics and founder of classical school of economics, in his famous book, “An Enquiry into the Nature and Causes of Wealth of Nations,” defined Economics as “the science of wealth”. According to him, “Economics is concerned with an enquiry into the nature and cause of wealth of nations, and it related to the laws of production, exchange, distribution and consumption of wealth”.

Characteristics of Wealth:

The main characteristics of Wealth definitions are follows:

(i) Study of Wealth:

According to wealth definitions, economics is the study of wealth. Hence, it deals with production, consumption, exchange and distribution.

(ii) Only Material Commodities:

This definition expresses the feelings that economics constitutes only material commodities while it ignores non-material goods as sunlight, rain water, sea water etc.

(iii) Causes of Wealth:

Economics is considered as study of causes of wealth accumulation which brings economic development. Hence, wealth can only increased with the increase in the production of only material goods.

(iv) Huge stress on Wealth:

The main aim of an economy is to become rich. Hence, it gives more stress on wealth not anything else.

(v) Economic Man:

Wealth definition is based on the man, who is always ‘self-centred’ and ‘self-interested’ in nature. Self-interest leads to material gains. Thus, such a man is known as Economic Man.’

Criticism:

The wealth definition has a number of defects. Economists like, Caryle and Morris claimed it a bastard and dismal science.

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The main criticisms are as follows:

(i) Materialistic Concept:

According to wealth definition, wealth is the sole end of all human beings. However, in reality, wealth is not an end in itself. It is only a means and that too one of many means for man’s happiness and welfare. Thus, this definition was rejected.

(ii) Ambiguous:

The wealth definition is ambiguous, i.e., meaning is not clear. In earlier days wealth means only material goods like money, gold, silver, land, cattle, horse etc. which are visible. However, it ignores non-material goods like services of doctor, washer man, barber, teacher etc. All these immaterial goods are as good as wealth.

(iii) Narrow Scope:

This definition claims wealth as the only subject matter of Economics, hence it ignores the most fundamental concept viz. welfare. The definition is, therefore, incomplete and narrow.

(iv) Concept of Economic Man:

Smith’s definition is based on the concept of economic man. Marshall and Pigou believed that economic man who works for selfish ends alone is not found in real life. In practical life, man’s activities are not only influenced by selfish motives but also by moral, social and religious factors.

(v) Scarcity and Choice:

Smith’s definition ignores the two most important concepts of economics, i.e., scarcity and choice. In true sense, economic activities take place because not of goods and services satisfying human wants are scarce but they have several uses. Thus, the question of choice arises. In this way, this definition neglects both aspects.

(vi) Importance of Man ignored:

The definition gives unnecessary stress on wealth while importance’s of human beings are neglected. Actually, wealth is a mean to human welfare. Thus, its subject matter does not remain a social science.

(vii) Stagnant:

The main drawback of this definition is stagnant in nature. Some critics pointed out that the definition is static and based on deductive method.